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A Pound Here, a Pound There

David Runciman on gambling

In 1989, between finishing my undergraduate degree and starting on a PhD, I worked in a betting shop in Tufnell Park. It was a branch of Coral, then one of the ‘Big Three’ bookmaking firms that dominated the market (the other two were Ladbrokes and William Hill). I was a cashier, which meant I took in the bets, made a record of them (using a fairly rudimentary photocopying system) and paid out to the lucky winners. Behind me and a couple of other cashiers sat the manager, a kindly, depressive middle-aged man who sorted all the bets by hand, totted up the wins and losses on a calculator and kept a doleful eye on the rest of us. He didn’t say much. Only very occasionally did he intervene.

I have three distinct memories of working there. The first is of the afternoon in March when Desert Orchid won the Cheltenham Gold Cup. Desert Orchid was the nation’s most popular racehorse, a grey steeplechaser who had become, in tabloid-speak, the ‘housewives’ favourite’, or as the broadsheets might put it, ‘the horse whose appeal transcended his sport’. The Cheltenham Gold Cup is the most important race in the steeplechase calendar, less well known than the Grand National but more prestigious. (The Grand National is a handicap, which means the best horse doesn’t often win: the better you are the more weight you have to carry, making it more of a lottery; the Gold Cup is run on merit.) The regular punters at the Tufnell Park branch of Coral weren’t exactly professional gamblers but they knew enough to spot that Desert Orchid wasn’t good value for this race: the tide of ignorant public money meant his odds were very cramped for a contest he was unlikely to win (apart from anything he didn’t enjoy running at left-handed tracks like Cheltenham). Most of our regulars had their money on less popular but better-suited rivals, including an Irish horse called Yahoo. Still, when Desert Orchid ploughed through mud and snow to cross the line just ahead of Yahoo, in the most exciting horse race I have ever seen, we all stood and cheered. It was a disastrous result for the bookies, who lost a fortune to the ignorant housewives, and it wasn’t much better for our regulars, who had been too clever for their own good. But no one seemed to care. I had never seen the place so buzzy. It was a moment when the sport transcended the gambling.

My second memory is of the day when a man came into the shop to place two bets on a single race: £100 on the 5/4 favourite and another £100 on the 7/4 second favourite. It was a nothing sort of race, run at one of the bread-and-butter tracks that were our daily business (Great Yarmouth, Pontefract, Taunton). A hundred pounds was a sizeable bet in a shop where most of the punters were wagering a pound or two, and many of them only pennies to make the fun last longer. In the end neither horse won. When the manager came across the betting slips and realised they were from the same person – all bets were handwritten so he recognised that the scrawl was the same on both – he became agitated and asked me if the man was still in the shop. When I said no, he ran out into the street, coming back angry and upset at not being able to find him. He spent the rest of the afternoon fretting about this guy. It wasn’t just that he had lost, but that he was risking so much money for such trivial rewards. Back then punters had to pay a 10 per cent levy on all bets, either when they placed them or as a deduction from their winnings, so there was an extra gamble to any wager in choosing when to be taxed on it – was it more irritating to pay out on a losing bet or risk having the taxman take a slice of your winnings? – and people were divided by temperament, optimists paying upfront, pessimists holding back and then regretting it. £100 at 5/4, taxed on the winnings, would net you £112.50, which given the loss of £100 on the other horse, meant a measly profit of £12.50 for a £200 outlay. Who would risk such parsimonious odds? Either it was some cack-handed money-laundering scheme or the man was a fool. The manager was still asking me if I’d seen him days later. He wanted to warn him off his own idiocy.

My last clear recollection is of arriving one day to find that one of my fellow cashiers wouldn’t be coming in any more. She had been caught in a hopelessly clumsy scam with her boyfriend, who had been posing as a punter and handing in incomplete betting slips that she attempted to doctor after the event. The security system was rudimentary, but it wasn’t so rudimentary that it couldn’t pick up on deliberately smudged handwriting and bets that were time-stamped after the races they covered. To my surprise, the manager didn’t seem especially upset about this. It happened quite a lot. In a shop that wasn’t selling anything – at least nothing tangible – money simply passed back and forth across the counter. The temptation was to think that some of it could be skimmed off. Why shouldn’t the casual staff, on fairly low wages, take their chances? They would get caught, sacked, forced to pay it back and replaced. It was part of the churn of the business. The bookies still won in the end.

No doubt these are sentimental memories. The Tufnell Park Coral wasn’t just a home to sporting punters, benign management and knockabout petty larceny. It was in fact a fairly grim working environment. Most days nothing very interesting happened, just the relentless grind of small bets from people who looked like they needed the money, and the steady drain of cash from their side of the counter over to ours. Of course there were plenty of winners too, and they usually made a lot of noise, roaring their dogs and horses to victory, then strutting up to collect the fruits of their foresight. Like all gamblers, they took the credit for their wins but not the responsibility for their losses (it was the jockey, the weather, the stupid bloody horse). Seeing the same men – almost all of them were men – come back time and again, the winners and the losers, interchangeable and predictable, was cumulatively dispiriting: the timeless dance of the self-deceived that takes place whenever bookmakers and punters meet. Go into any bookies today and not much has changed. And yet, compared to the shiny new betting shops that have been popping up on so many high streets recently, the one I worked in belonged to another world.

It was, for starters, very smoky. Smoking was not merely legal; it was more or less compulsory, and we all did it. It added to the shabbiness of the place, with its few isolated stools placed around noticeboards on which the day’s racing papers were pinned up. To get in you had to pass through a beaded curtain that was intended to prevent innocent passers-by from getting a glimpse of the unseemly goings-on within. No advertising was allowed outside. No comfortable seating was available inside. Hot drinks were frowned on. If it was a bit grim, it was because it was meant to be a bit grim. This was a time when gambling was tolerated by the state but decidedly not encouraged. There were, for instance, no toilets permitted in betting shops for the use of customers (just for staff), so as to prevent loitering and to discourage the idea that this might be a good spot to spend a whole afternoon. The law had been relaxed a couple of years before to allow races to be shown live on TV screens in places where people could bet on them; until then, punters had to make do with sound commentary only, in order to limit the possible excitement (when I was an undergraduate, and spent a fair amount of time in betting shops, it was the sound-only era, which did limit the excitement but also added to it, since if you couldn’t see your horse you never knew how badly it was running, which always left open the possibility of a late charge). Even so, the new open-access TV coverage was functional rather than glitzy and punters had to stand around to watch it. The message was this: people shouldn’t be prevented from gambling, they should be given the chance to do it sensibly, which meant being provided with reliable information and a clear view of what they were betting on. It should happen in relatively safe and secure environments. But it wasn’t meant to be fun.

This joyless, functional era of legalised betting represents a middle point in the evolution of gambling control in Britain, between an earlier age of repression and the current round of liberalisation. During the first half of the 20th century the state’s attitude to gambling had been moralistic and disapproving. It was also strikingly inconsistent. Betting was permitted at race tracks but not on high streets; it was tolerated among the wealthy (who could do it in private clubs) but discouraged for the workers (who were limited to supposedly more innocent pastimes like the football pools and bingo); it was OK at the seaside but not in the inner city. The law was confused and confusing. Worse, though, it was ineffective. If the aim was to make sure most people didn’t gamble, it didn’t work, because for many people the impulse to gamble proved far stronger than the state’s ability to stop them. Those who wanted to bet did so anyway, but illegally, through street bookies and unlicensed casinos. The police were forced to turn a blind eye, until things got out of hand. By the late 1950s the focus of official disquiet was the illicit casino trade, which was fuelling turf wars, especially in the East End of London, where the Kray twins were using underground gambling as a means of exerting their grip. So in 1960 the law was changed to allow licensed bookmakers to operate alongside other retail outlets, where it would at least be easier for the authorities to monitor what was going on. Casinos were also permitted in designated areas, again with the explicit purpose of making it possible to keep tabs on them. In both cases legalisation came with tight controls: public entry into casinos was limited to those willing to take out membership, which in turn required a cooling-off period to prevent impulsive gambling. Bookmakers were not allowed to advertise their activities, or even to indicate what services they offered (hence those beaded curtains). Legal betting was for the people who were going to gamble anyway, not for those who might stumble on it. It was treated as an undesirable but unavoidable fact of life. By licensing it government could also tax it, which made the pill easier to swallow. The principle underlying the new legislation was known as ‘unstimulated demand’. Servicing the demand was acceptable; stoking it was not.

Once the state has decided to legalise gambling, in essence two other choices remain: will it be permissible to profit from it, and will it be permissible to promote it? These are two separate questions. The 1960 legislation set Britain on a particular path by answering yes to the first and no to the second. In many European countries it was the other way round. In France, for instance, it was decided that only the state could be permitted to benefit from the large profits to be made in the gambling business; anything else might threaten the moral fabric of the republic. But given it was the state that was benefiting, there was no reason why advertising should be prohibited, since it was all in a good cause. In addition France had a national lottery, a pre-Revolutionary practice revived by the socialist governments of the 1930s to boost revenue. So gambling in France was public in both senses: publicly owned and publicly promoted. In Britain it remained doubly private. Harold Macmillan’s Conservative government wasn’t going to nationalise a major industry if it could help it. The state bookmaker (the Tote, which operated on the French system of pooling bets) was forced to compete for custom with privately owned rivals, which could offer more tempting fixed odds. But the British government wasn’t about to let those private firms flaunt what they were up to. This was to be a commercial industry but also a relatively hush-hush one. The result was the rise of the Big Three (Mecca was the fourth, until it merged with William Hill in 1988), which were able to take advantage of economies of scale, but also of a host of small independent bookmakers, especially in rural areas, where competition was limited and the clientele was grateful for whatever they could get. By the late 1970s Britain had as many as 15,000 betting shops, half of which were owned by independents.

In 1976 the Labour government set up a Royal Commission to review how the gambling industry in Britain had come to be organised. It was chaired by Victor Rothschild and its eclectic membership included the philosopher Bernard Williams, the sports commentator David Coleman and the agony aunt Marje Proops. The report they produced two years later was measured, intelligent, elegantly written, slightly agonised and almost wholly ineffectual. The Rothschild Commission accepted that the law on gambling in Britain remained untidy, with plenty of apparent inconsistencies: why, for instance, were the rules different at the seaside, where gambling establishments could promote themselves as fun (‘amusement arcades’), unlike inland, where they couldn’t? But it also announced (in a line almost certainly from Bernard Williams): ‘We do not believe that tidiness is an objective in itself.’ The general tone was liberal, reflecting the view of its members that it was not really the business of the state to decide how people should spend their time or money, or to determine what sorts of private pleasure were publicly acceptable. Some aspects of the existing law were deemed nitpicking and pointlessly punitive. Why not have lavatories in betting shops? On the other hand, ‘some measure of paternalism is desirable,’ and this included ‘preventing housewives from being deflected into prize bingo establishments during their morning shopping in the high street’. They did not wish to ditch altogether the principle of unstimulated demand. Earlier Royal Commissions on gambling (there had been one in 1933 and another in 1951) had been explicit about the danger gambling posed to the urban working classes, who were believed to be both more susceptible to its lure and more likely to suffer from its consequences. The Rothschild Commission went out of its way to note that a bit of light gambling might actually be good for the morale of people ‘engaged in repetitive or otherwise uncongenial tasks’. They found little evidence of exploitation, reporting that contrary to the conventional wisdom, the betting industry did not generate excessive profits. There was scope for further liberalisation without putting public welfare at risk. This included the possibility of creating a national lottery for good causes.

The reason the report had so little impact was that it appeared at just the wrong time: the pre-dawn of Thatcherism. Its tone was exactly wrong for the coming age of the daughter of a Methodist grocer from Grantham. On the one hand, it was too tolerant of frivolity and fun. On the other, it was too squeamish about the workings of the free market, appearing to suggest that some kinds of money-making were more productive than others. ‘Gambling does not create wealth,’ the report stated in its introduction, before going on to remark that if people enjoyed it then ‘there is no reason why it should.’ It is hard to think of a line better designed to raise the hackles of Thatcherites. Of course gambling creates wealth (what did Rothschild think was paying for all those betting shops and the people who worked in them?). Enjoyment didn’t enter into it. The result was that the gambling industry in Britain remained more or less unreformed throughout the 1980s, a lingering creation of the climate of the early 1960s. For most people – including most politicians – it was out of sight, out of mind. That’s certainly the way it felt in my betting shop in Tufnell Park.

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Two things happened to change this. The first was the decision of John Major’s government to introduce a national lottery in 1994. At a stroke it became impossible for the government to maintain its position that gambling should not be stimulated by advertising, since it was now determined to advertise its own product. The national lottery was forced down people’s throats – more than twenty million people watched the first live draw hosted by Noel Edmonds on the BBC – and though the fact that it was all in a good cause was part of the pitch, it was only a small part. The lottery was sold to the public as a flutter, the chance to get very rich, very quickly, on a very small outlay. Killjoys worried that it would be bad for ordinary people, especially the poor, who would be tempted to fritter their money away on foolish dreams of fortune – in my first piece for the LRB (22 February 1996), I called the lottery ‘a tax on stupidity’. These fears turned out to be overblown. There is almost no evidence linking the lottery to gambling addiction. Most people play it sensibly, often in syndicates, and see it as harmless fun, knowing full well that their chances of winning are very remote. Addicts aren’t interested because it doesn’t deliver a quick enough hit. The people who turned out to be at risk from their exposure to this new form of gambling were in government. It tempted politicians to see gambling as a relatively painless way to raise revenue (painless in the sense that most punters have their minds on other things). At the same time it made it much harder for politicians to resist the demands from major players in the gambling industry to be allowed to push their own products. Almost immediately the established bookmakers began a lobbying campaign to get the rules against advertising betting services relaxed: if you can do it, why can’t we? Step by step the government started to make concessions. With each concession the demand came for more liberalisation: if so and so is allowed to do it, why can’t we? The dam was broken.

The other big change was the arrival of the internet. By the late 1990s it was evident that the new technology was going to transform a wide range of industries, even if few people had much idea how, but it was already clear that the internet was an efficient delivery device for the vices that government had traditionally seen as part of its role to discourage. The web was awash with pornography from the outset. Why should gambling be any different? (The extensive and inconclusive literature on the psychology of gambling has rarely been shy of finding links between the perverse pleasures of the dead-eyed gambler and other forms of self-abuse.) There was something close to a panic in official circles that people would start using their PCs as online slot machines. Not only did this threaten to make a mockery of government attempts to police our gambling habits, it also threatened the revenue supply, since online wagers would be much harder to tax. The rules regulating the betting industry, which had started to look creaky in the 1970s, were by the turn of the millennium in danger of becoming obsolete.

In 2000 the Home Office began a fresh review of gambling regulation under the chairmanship of Alan Budd, an economist and one of the founding members of the Bank of England’s Monetary Policy Committee. The New Labour era, with its combination of free-market pragmatism and pop cultural cringe, turned out to be a far more propitious time for gambling reform. Blairites were famously relaxed about people either making pots of money or having fun with it (Gordon Brown was another story). The members of Budd’s commission included the political philosopher Jonathan Wolff and the sports journalist Mihir Bose. The report they produced in 2001, for the newly created Department for Culture, Media and Sport, was intelligent and elegantly written, but unlike the Rothschild report, it was also pretty forthright. It turned out to be frighteningly effective.

Budd made clear his differences from Rothschild. He had no time for squeamishness about non-productive ways of making money. The gambling industry was to be treated as a business like any other, capable of generating a wide range of economic benefits, including jobs. The Budd report dropped the criterion of unstimulated demand as the test for acceptable gambling. This was partly on pragmatic grounds (it was clear by this point that demand was being stimulated all over the place, online and offline) and partly a point of principle (why should stimulating demand be a bad thing if there was nothing wrong with the demand itself?). The Budd Commission was not out-and-out libertarian, however. There was still a place for paternalism round the edges. But now the test was harm rather than demand: gambling should be permitted except where it could be shown to do damage, rather than discouraged except where it could be shown that it was going to happen anyway. This meant a focus on three types of people in particular: the young, who might be vulnerable to exploitation; ‘problem gamblers’ (aka addicts), for whom any extra exposure posed a threat; and criminals, who might exploit any relaxation of the law for their own ends. The role of the state was to keep the young safe, to keep an eye on the addicts and to keep the criminals out.

What followed was a series of practical recommendations. Restrictions on advertising should be lifted. Cooling-off periods for entry into casinos should be abolished. Limitations on the location of gambling establishments should be relaxed (and where possible the decision should be devolved onto local authorities). This wasn’t meant to be a free-for-all. One version of the new harm principle that ended up looking a bit like the old demand principle concerned what is known as ‘ambient gambling’. Budd held the line that gambling shouldn’t be allowed in places people weren’t expecting to find it: slot machines in fish and chip shops, say, or scratch cards for sale in pubs. Here, the canary in the coalmine was Australia, which had relaxed its gambling laws during the 1990s to the point that high-stakes slot machines (‘pokies’) had started cropping up all over the place, notably in pubs and clubs. By 2000 Australia had one of the highest incidences of problem gambling in the developed world. It also had one of the lowest savings rates. These facts were not thought to be unrelated. ‘As far as possible,’ Budd wrote, ‘gambling should only be available at places dedicated to it.’ Betting shops and casinos could be located anywhere, but opportunities to bet shouldn’t be offered anywhere else.

As a result, Britain did not turn into Australia. Nor, to the disappointment of some, did any part of it turn into Las Vegas. Budd’s report had opened the door to the possibility of super-casinos in seaside resorts, with the aim of regenerating run-down areas and sparking the kind of wealth creation that Rothschild had been so sniffy about. Blackpool was usually held up as a good place to start, though other places were equally keen. The idea gathered a head of steam during the last phase of the Blair administration but failed to survive the arrival in Downing Street of his successor. Brown let it be known that he didn’t approve (in this he was egged on by his friend Paul Dacre at the Daily Mail) and that was that. In other respects gambling reform in Britain followed the path Budd laid down for it. The Gambling Act of 2005 essentially treated the activity as part of the leisure industry, something that needed its own rules and regulations but didn’t have to be handled with kid gloves. Advertising was to be allowed. Competition was to be encouraged. Exploitation was to be guarded against. It was all meant to be good, clean fun.

It’s already possible to see how and why the situation hasn’t quite turned out like that. One thing that couldn’t have been foreseen even then was the explosion in mobile technology, meaning that people can now carry their own personal casinos and betting shops around with them in their pockets. Holding the line against ambient gambling looks increasingly futile. Ambience is everywhere. The current raft of TV ads promoting online gambling services make full play of this: they show punters in pubs or supermarkets, pulling out their phones to place bets whenever the urge strikes. The tone of the ads is relentlessly jolly: gambling can inject a spark of excitement into even the most routine part of your day. One that has been doing the rounds recently shows a chubby, bald bloke standing with his shopping trolley in the baked beans aisle. He glances at his phone, and suddenly a salsa band springs out from behind the tins to get him jigging in rhythm: he’s seen a special offer on the in-play football betting. The excitement is infectious. Seeing her man start to dance, his wife can only smile encouragingly: anything to put a spring in his step.

The sudden proliferation of advertising campaigns like these is a sign of how competitive the industry has become. In-play betting – the opportunity to gamble on events as they are happening, and to adjust your bets accordingly – is big business. An enormous array of choices is now available to punters when it comes to placing bets, and bookmakers have to work very hard these days to stay in business at all. Many people continue to believe that bookmaking is a licence to print money. Not so, say the bookies: without significant investment and nimble promotional activity it’s barely possible to break even. The online revolution has driven down entry costs, so that all sorts of new players have been making a name for themselves (BetOnline, BetonSports, Betstar, Bwin, Sportingbet, Unibet: you can see their slogans all over the electronic advertising hoardings of every major football ground in the country). It has also become much easier for punters to compare the value that different services offer. If you’d like to place a bet it is now very easy to find out which of the many betting services out there will give you the best odds (the current market leader in supplying this information, www.oddschecker.com, has itself become a big business). Spread betting firms like Sporting Index provide plentiful opportunities to offload winning or losing bets (spread betting operates like a futures market, so when the spread moves in your favour you can hedge your position to guarantee a profit); internet betting exchanges like Betfair make it possible for individual punters to lay the bets themselves, essentially bypassing conventional bookmakers altogether to let people with opposed views on the likely outcome of particular events transact directly with each other. In some ways the gambling industry has come to resemble the airline industry. The big boys are still around (Coral, William Hill and Ladbrokes are all fighting their corner) but their market share has fallen. They face rivals that have muscled in on their territory by offering cheaper or better services: firms like Bet365, the EasyJet of the gambling world, which has grown in little more than a decade to become a billion pound business and the biggest employer in Stoke-on-Trent (as well as the sponsor of the town’s football team); or Paddy Power, the Irish-based upstart, which like Ryanair has been adept at outfoxing the establishment and has shown a similar penchant for brash and tasteless advertising (a recent Paddy Power ad offered odds on the Oscar Pistorius trial with the tagline ‘money back if he walks’). Then there is the host of small fry, snapping at their heels with all sorts of innovative offers that can appear too good to be true (and sometimes are).

However, as with the airline industry, it would be a mistake to overstate how competitive the gambling business has become. There is still plenty of money to be captured from people who will take what they are offered. The fierceness of the current advertising blitz for in-play betting is driven by the premium on getting punters to open online accounts with a given firm. Once someone has signed up, the chances are that he will keep coming back. Most punters don’t actually spend much time trawling around in search of the best prices. They act on impulse and they return to the place that lets them do it with the least fuss. Convenience counts for much more than value. I have an online account with Ladbrokes that I opened about a decade ago and that’s where I have remained ever since. When I bet I tend to think that if I’m going to win, I don’t much mind if the odds aren’t quite as good as I could have got elsewhere; and if I’m going to lose, then it doesn’t matter what the odds were anyway. It’s hardly a rational strategy – in the long run it’s a recipe for ruin – but what the hell. It’s fair to say that if consumers really did behave like rational economic agents the gambling industry wouldn’t exist. Punters are the losers from a business that is all about the enticing idea of winning. You can’t make money out of them by finding ways to let them actually win. So you work on the enticement.

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Not all the action in the industry has moved online. Another feature of the current climate that Budd failed to anticipate is the way the betting shop market has evolved. The internet hasn’t killed the physical side of the business. Instead, it is one of the few retail sectors whose presence on the high street has grown. In places where large numbers of shops have been boarded up, bookies are sometimes the only ones willing to open new businesses. This often seems to be in inverse proportion to the general economic prospects of the place concerned: the less attractive it looks to other retailers, the better it looks to the bookmakers. Betting shops have started appearing in clusters in deprived areas, sometimes in groups of three or four. This ‘clustering’ – as it has come to be known – is a curious mirror-image of the process initiated by the reforms of the early 1960s. Then clustering was an intended effect of the legislation: the idea was to restrict gambling establishments (above all casinos) to specific locations in order to make them easier to supervise. The 2005 legislation was designed to do away with that heavy-handed oversight. Now it’s market forces that are leading the bookies to huddle together for warmth.

Little of what happens in these betting shops is new. Many regular punters continue to bet in small amounts – a pound here, a pound there – eking out the fun for as long as they can. Despite the plethora of other sports that can now be gambled on, horse-racing remains the number one draw in betting shops. Greyhound racing is also still popular with many punters, despite having almost zero presence in mainstream sports coverage (when was the last time you read an account of a greyhound race in the sports pages?). But two things about betting shops have changed. First, they advertise their presence, glaringly. When a new one pops up on an otherwise anonymous shopping street, you will notice. It will be bright and colourful, and instead of beaded curtains there are often big glass windows revealing the flashing lights and winking screens within. Second, some of those flashing lights come from large and sophisticated gaming machines known as Fixed Odds Betting Terminals (FOBTs). These weren’t around when I worked in a betting shop: then gambling was limited to real-life events on which the odds were always changing. Though the bookies were sure to win in the long run, the outcome in the short term could be pretty uncertain: horses can do the strangest things. Bookmakers – including the one I worked in – often had very bad weeks, when the results went against them, though they rarely had bad months and almost never bad years. FOBTs give punters the chance to play roulette, poker and other casino games in electronic form. The odds are fixed in the sense that the game is always the same: the cut for the shop that hosts them is a function of the unwavering laws of probability and entirely predictable (keep spinning a roulette wheel and the bank will win precisely 1/37th of the time). It’s never the weather, the jockey, the bloody horse. It’s these terminals that are currently driving the growth of the business.

Bookmakers are presently limited to four machines per shop. This was the figure stipulated by Budd, who wanted to accommodate industry demand for greater variety in the services that could be offered without going down the Australian route. It was also the pragmatic recognition of a fait accompli: even before 2001 the new technology had allowed betting shops to start hosting their own ‘pokies’ by routing the machines through off-site online providers, so getting around the technical requirement that no casino gaming should take place on the premises. By making it official the law also made it possible to raise extra tax revenue, which always helps to salve any bruised consciences in government (though a specific levy on FOBTs was not introduced until 2013, when it was set at 20 per cent; in the most recent budget the figure was raised to 25 per cent). FOBTs currently account for more than £1.5 billion of the betting industry’s gross annual profit: serious money. The average weekly take from each individual terminal is more than £900, which isn’t bad given that they are almost costless to run (no extra staff are needed: you just plug in the machines and away you go). Research conducted last year by the Guardian shows that the number of FOBTs and the revenue generated from them tends to be considerably higher in poorer districts. If we compare, for instance, two parliamentary constituencies of roughly equal size, there are more than twice as many machines in Bethnal Green and Bow as in Chelsea and Fulham, more than twice as much is gambled on them (£269 million compared to £119 million) and the profits for the bookies are more than twice as great (over £8 million compared to less than £4 million). Bethnal Green and Bow also has more than three times as many people claiming unemployment benefit as Chelsea and Fulham.

This is where the political heat about gambling is now being generated. Campaigns like Stop the FOBTs have been successful in pushing the regulation of these machines up the political agenda. They are being supported in this by the Guardian on one side and the Daily Mail on the other, both of which have fallen into the habit of describing FOBTs as the ‘crack cocaine of gambling’. (This phrase is bandied about a little too readily: at the time of the Budd Commission it was scratch cards that were routinely described as the ‘crack cocaine’ of the gambling industry, which turned out not to be true: very few people are addicted to scratch cards.) Ed Miliband has pledged, if Labour wins the next election, to empower local authorities to ban FOBTs. Bookmakers have been forced to put big slogans in their windows warning punters to play the machines responsibly and letting them know where to find information on gambling addiction. They are also pledged to train their staff to spot the signs when individuals are getting in too deep. Osborne’s recent tax hike was a sop to this pressure, though for many campaigners it didn’t go far enough. They believe, rightly, that the government is deeply conflicted on this issue: a tax hike, which doesn’t impact directly on punters, is very different from a legally enforceable limit on maximum stakes, which would strike at punters, bookies and government revenues all at once. However, the bookmakers are pushing back hard. They argue that FOBTs are what allow betting shops to stay open and thereby guarantee the jobs of the people who work there. It might not take many people to service the machines, but it takes the machines to generate the income to pay for the people who take the bets on the horses. The industry issued a petition in response to the 2014 budget insisting that raising the tax rate was putting ten thousand jobs and more than 2300 shops at immediate risk.

In 2012 the Culture, Media and Sport Select Committee undertook a review of the Gambling Act of 2005 and published its report under the title A Bet Worth Taking? If that question mark was meant to indicate some doubt, not much was evident in its findings. The evidence presented to the committee by representatives of the gambling industry followed the classic pattern for the ‘addiction’ industries (alcohol, tobacco, gambling, now sugar) under attack from do-gooders.[*] The strategy has three prongs. First, point out that most consumers of the product are intelligent and responsible people perfectly capable of deciding for themselves what is or is not good for them. Why let the minority of irresponsible addicts spoil it for everyone else? Second, insist that more research needs to be done to find out just how damaging the product is and whether the harms have been exaggerated. Then make sure that this research is funded by the industry in question. Third, argue that if there is work to be done in protecting consumers, that work is best undertaken by the industry itself, which knows its own internal workings better than anyone else. If it were left up to government, any reform would be inefficient and ineffective. This is the mantra: the consumer is no fool; the evidence is not yet in; the industry knows best. It was drummed into the PR and lobbying industries by their rearguard efforts to rescue the tobacco industry from mounting evidence that it was destroying its own customers. Now it has been drummed back into other industries that find themselves in the same boat, and often hire the same PR and lobbying professionals to advise them.

The leading bookmakers (from Coral, William Hill, Ladbrokes and a few others) who appeared before the select committee in 2012 followed that advice to the letter.The Chief Executive of the Association of British Bookmakers made his view clear: ‘We think we are best placed, given our understanding of consumer demand … to make the right decisions.’ In other words, we know these losers; you don’t; let us handle it. He also addressed the issue of clustering. The reason there were so many betting shops on particular high streets was the legal limit of four FOBTs per shop, which meant that in densely populated areas a large number of shops were required. If people didn’t like their town centres being colonised by bookies, the solution was simple: let each shop have more machines. That way there would be the same number of machines but fewer shops. You have to admire the neatness of the logic. You also have to admire the brass neck of the committee – one of whose most vocal members, Philip Davies MP, is a former bookmaker – which swallowed almost the whole package. Its final report argued that if there was an issue with clustering, the solution was to relax the rules about numbers of FOBTs permitted on a single site. Local authorities should be given the power to allow as many machines per shop as they saw fit. Central government should butt out altogether. Above all, though, more research should be commissioned on gambling addiction to see if there was really a problem at all.

Every official report on gambling in Britain over the past hundred years has insisted on the need for more research to allow better informed decisions about the risks. The plea for hard information about gambling and its social impact was there in the 1933 Royal Commission. The same plea came from its successor in 1951. The Rothschild report said much more detailed research was needed on addictive behaviour. So did Budd. The wait goes on. Part of the problem is that it’s very hard to define what counts as gambling addiction: it has no obvious medical manifestations (unlike, say, alcoholism), so it’s not possible to measure, for instance, how many admissions to A&E each year are gambling related. Campaigners invariably want to turn problem gambling into a public health issue, but they face an uphill struggle. (When one witness to the select committee asked its chairman where the Department of Health was in all this, he was roundly mocked: the NHS is busy enough as it is.) Most surveys tend to rely on the self-reported experiences of gamblers, who are asked questions designed to elicit evidence of addictive behaviour: have you ever lied about how much you gamble? Have you ever borrowed money to finance your gambling? Have you ever thought of quitting but felt you couldn’t stop? Any conclusions are inevitably somewhat arbitrary: how many lies does it take to distinguish between social embarrassment and addictive behaviour? Based on these surveys the current best estimate of the number of problem gamblers is around one or two per cent of the total. But that doesn’t really settle anything until you decide what constitutes the total: if it means anyone who ever bets at all, including on the National Lottery, then that’s most of the population, which makes one or two per cent a big number (close on a million people); if it’s only those who use betting shops or gamble online, then it’s a much smaller group. But the other difficulty is that however much money is spent on investigating these questions (and not much is), the gambling industry itself spends most of it. A recent report by Goldsmiths, University of London into the funding of academic gambling research found that the vast bulk of it came from industry sources, though declarations of conflicts of interest are rare. The focus on ‘problem’ gambling, which drives much of the research, serves the industry’s interests in two ways: first, by making it easier to stick to the mantra that the difficulties of the few should not be used to justify restrictions on the many; and second, by making sure the question of definition remains unresolved. The gambling industry has an incentive to keep any research open-ended, because so long as nothing is settled there is always a reason for delaying a decision until more studies are done. Doubt is the currency in which these people are trading.

*

It is important not to get too conspiratorial about this. Gambling is not tobacco. There is no smoking gun here. Of course plenty of violence is associated with gambling in different parts of the world and huge amounts of corruption, especially in Asia (betting on cricket in India seems to be a rotten business from head to toe). But in Britain things are relatively under control. Britain’s leading bookmakers are neither nefarious nor corrupt. They are not sitting on hidden evidence of the terrible damage that their product does to customers, which they are doing their best to suppress. What gambling does to the people who persist with it is an open secret. When surveyed, very few gamblers have any illusions about what will happen in the long run: they know they will lose. No one believes bookies make money by accident. The self-deception going on here is both complex and routine: it is a part of the cocktail of cognitive biases we all share, which makes human beings liable to misapprehend the relationship between short-term outcomes and long-term consequences. Everyday gamblers accept that they can’t really win, yet fervently believe their next bet will be a winning one. Addicts are hooked on the sensations that come with gambling, even though they’re fully aware of the harm that results. No one is being conned. And it doesn’t follow that just because it suits the gambling industry to spin a particular line, what they say is necessarily untrue. Problem gambling is a difficult category to pin down. It probably does affect only a small proportion of the population. The overall volume of gambling has not greatly increased following liberalisation. There are now fewer betting shops than at any time since the 1960s (they have more or less disappeared from many rural areas). Many punters do see gambling as a harmless leisure activity that offers them value for money (twenty or thirty quid spent over an evening in a casino can look like a good investment when compared to the cost of going to a movie plus drinks and popcorn). Yes, there are some terrible personal stories about what happens when gambling has an individual in its grip, and it isn’t just in books that gamblers are sometimes driven to suicide. But compared to tobacco, or alcohol, or even sugar, very few punters die of their habit.

So what is the problem? In the Budd report there is a brief discussion of the idea that gambling might produce what is described as a condition of ‘social excess’.

What we believe is involved is the idea that liberalisation of gambling might produce a state of society that was undesirable, even if those who were gambling were not unhappy. Let us suppose, for example, that a more relaxed approach to regulation greatly increased the number of gambling establishments and also raised both the number of active gamblers and the time (and money) they spent gambling. An adherent of the liberal approach would welcome this development as a sign that consumers were better able to spend their time and money as they wished. But an alternative view would be that the quality of social life had deteriorated, that Britain had become less civilised, and that the state has a responsibility to prevent this from happening.

Budd admitted that his committee was hard pressed to resolve this question and so essentially they were skirting it (one way they did this was through the time-honoured British device of saying that the issue ought to be devolved to local government, knowing full well that local authorities lack most of the powers needed to do anything about it). There’s no need to skirt it any more. Have we reached a condition of social excess? Yes. There is too much gambling in the ambient environment of our everyday lives, too much advertising of it on TV, too many betting shops in areas that lack many basic retail services, too many machines that extract money like tribute from people who can’t afford it. I know this sounds horribly de haut en bas from someone who once slummed it working in a betting shop. The question of gambling regulation has always been bedevilled by accusations of snobbery and elitism. It cuts both ways. When the earlier Royal Commissions worried about what gambling would do to the workers, they were easily painted as hypocrites, given what went on in gentlemen’s clubs. But when Rothschild said that working men and women should be allowed the pleasures of a flutter, he was accused of patronising them. Budd was especially cutting about this. Citing Rothschild’s reference to people engaged in ‘repetitive or otherwise uncongenial tasks’, he wrote: ‘Some of us find those words intolerably paternalistic with the implication that gambling is acceptable (though not to be encouraged) for the workers, whose lives are so limited, but not something that could appeal to the educated.’ Try to protect ordinary people from gambling and you are a snob. Try to allow ordinary people to enjoy gambling and you are a snob. There’s also the persistent suspicion that any objection to the spread of gambling is really just an aesthetic one. What’s wrong with having betting shops on high streets? That they’re ugly? If so, why not prettify them? Budd thought it would be a bad idea to have betting in fish and chip shops. But why not have fish and chips in betting shops, or at least some kind of decent food, nice coffee and comfortable seating? There’s no reason why a branch of Ladbrokes shouldn’t be as pleasant as a branch of Starbucks, except that the law still disallows it, with its nitpicking anxieties about the indulgences of the indigent poor. Or at least that’s the line.

*

What’s wrong with it is that treating gambling as a consumer activity like any other ignores the ways in which it is different. Yes, gambling creates wealth, but no, normal market forces do not operate here. If they did, it wouldn’t be the case that bookies see their best business opportunities in areas where other retailers struggle to see any. The lure of FOBTs is greatest in places where alternative comforts are hard to find. The solution isn’t to make the betting environment more comfortable; it’s to accept that consumer choice is not the primary criterion of value. The long-standing privatisation of gambling in Britain means that we are in the habit of leaving it to market forces, but this isn’t simply a problem of political culture. In Denmark, which until recently followed the Continental model of state control of the gambling industry, the same forces operate, even though the former state operator, Danske Spil, still controls more than 60 per cent of the market. In a documentary broadcast last year on Danish television, an employee of Danske Spil spilled the beans: ‘It sounds brutal, but where a lot of people are on benefits the slot machines are doing well. Because gambling halls become a bit like living-rooms for miserable souls who will gamble away their rent and their kids’ money.’ The employee was subsequently disciplined and the company put out a statement denying that such thinking formed any part of its business strategy. But such companies don’t need to strategise it. They just need to let it happen, which it will if the state no longer believes it can stop them.

The story of gambling regulation in recent years has been folded into a neo-liberal narrative about states learning their limits. Not only is it no business of states to tell people how to spend their money, it is no longer in their power. Money moves so easily across borders and out of taxable reach that governments have no choice but to adapt. If they try to impose restrictions on the providers of gambling services, those providers will simply move offshore and online to places like Gibraltar, where many current fly-by-night gambling operations are located. If governments try to restrict the activities of punters, they too will migrate, taking their custom to places where it can no longer be supervised or taxed. It’s the same narrative that is often told about financial services in general. But it is only, at most, half the story. If you look at any of the online sites that provide information to the international gambling industry, you don’t come away with the im-pression that states are powerless. Instead, everything the big players in the market do is conditioned by what states permit. GamblingCompliance, the leading information hub for the gambling industry, is nothing but an itemisation of what different states will and will not allow. While governments are following the money, the money is following minute changes in government rules and regulations. Governments are only as powerless as they choose to be.

The British story is emblematic of this. What’s gone wrong with gambling regulation in Britain is not that it has been captured by sinister interests determined to push their evil product down our throats. It’s that government has acquiesced in the idea that its regulatory role absolves it of all responsibility to take a stand. The most recent mission statement from the Department of Culture, Media and Sport describes its position as follows: ‘We want to make sure that the gambling industry continues to be run responsibly, so that it provides a safe and enjoyable leisure activity, which is also an important source of revenue and jobs.’ The intention is to create an air of purpose. But what it really conveys is a sense of drift. Continuity – responsibility – enjoyment – leisure – revenue – jobs. Good, clean fun. This is balanced, bureaucratic, post-ideological politics, weighing harms against benefits and the evidence against more evidence. The aim is to be neutral. But gambling is not a neutral activity: it favours the bookies. Evidence-based politics is invariably dressed up as the most responsible way to proceed but often it is an abdication of responsibility, especially when the evidence provides so many excuses for inaction. Seeing gambling as a source of revenue and jobs makes it much harder to stand up to the gambling industry in the name of other social goods. Governments are very reluctant to do that these days. Ed Miliband has promised to take on the gambling industry if he gets into power. We’ll see. First he has to win. Then he has to mean it. Gambling is often treated as though it were a morality tale. It is. But it’s not a morality tale about gamblers. It’s a morality tale about government.

[*] A neat description of this strategy is provided by Tamasin Cave on the website Spinwatch.

Letters

David Runciman’s piece about gambling reminded me of the occasion when, in the 1970s, in my capacity as a lecturer in computing and applied statistics at Birmingham University, I was approached by someone from the Gaming Board (LRB, 21 August). There was a proposal for a new variant of ‘one-armed bandit’ and they wanted an opinion as to whether it exhibited ‘random’ results. The existing electro-mechanical machines had spinning drums which were activated by a lever, and the result was determined by one particular line of symbols when the drums stopped. The jackpot was £25. It didn’t seem unreasonable to view these machines as producing random results.

The new variant was to have a jackpot of £75. If it paid out the jackpot at the same frequency as the unmodified machines for the same stake it would lose money. To maintain the odds an additional piece of machinery was fitted. Once the jackpot had been won, the new machinery would detect the next two jackpot lines and flip them over to non-winning lines. This is clearly a non-random process. The probability of winning a jackpot immediately after a win should be exactly the same as on any other play, whereas it was now zero for at least the next two spins. Having reported back I later heard that the machines had been allowed. The explanation given to me was that the Gaming Board did not feel that a judge would understand my argument so they would lose any legal case.

Peter Lewis
Bath

David Runciman captured some of the irrationality of betting but didn’t mention the ‘maxiwin’ ratio in the 1978 Rothschild report: the highest possible prize which may be won in a form of gambling in proportion to the smallest stake necessary to have a chance of winning that prize. This sort of bet allows the gambler to dream of how a huge win might be spent. The National Lottery has the highest maxiwin ratio today in the UK and is, in some ways, the most rational of bets. As one of the early winners of the jackpot, a school cleaner, said when asked if the win would change her life: ‘I bloody well hope so.’

David Runciman makes some mistakes in his essay on gambling (LRB, 21 August). Stoke-on-Trent is not a town and hasn’t been since 1925. Stoke City (which I support) isn’t ‘the town’s’ football team: the city has the honour of also hosting Port Vale, for those who like their football resolutely unglamorous and unsuccessful. Bet365 doesn’t just ‘sponsor’ Stoke City: it owns the club, no doubt as a useful tax loss vehicle – but at least the company pays taxes in the UK, unlike many of its rivals.

Gambling establishments such as the one next door to my flat have hollowed out city centres and prey on the poor, but they play a greater role in funnelling money offshore while creating poor-quality jobs with few transferable skills. Wolverhampton Council has claimed that ‘jobs’ justify licensing a new mega-casino, although the jobs are largely unskilled and minimum-wage. It has, however, devoted £9000 to fund gambling addiction remedies, which must represent at least an hour’s turnover for the casino, so clearly there’s nothing to worry about.

Aidan Byrne
University of Wolverhampton

‘Gambling is a morality tale about government,’ David Runciman concludes. Given the strong historical influence of the Protestant churches and women’s movements in New Zealand, gambling was long considered anathema to governments here. However, the embracing of the free market in the mid-1980s saw a liberalisation of gambling laws and the introduction of electronic gaming machines (‘pokies’). By 2003, 24,221 non-casino pokie machines had been installed in social clubs and taverns, disproportionately in the country’s poorest areas. The deleterious social consequences were soon recognised and, thanks to community opposition, some local authorities introduced policies to discourage them. By June 2014, the number of non-casino pokies had dropped to 17,130. Of course, government continues to collect significant tax revenue from these machines. The starkest morality tale, however, lies with the pokie machine concessions granted in 2013 to Auckland’s SkyCity casino in exchange for a national convention centre and the promise of job creation. The responsible ministry noted that the increased problem gambling which resulted from the concessions would lead to ‘suicide; family violence; children inadequately clothed and fed, and other examples of deprivation and poor parenting’. The government considered these outcomes a price worth paying.

Jonathan Barrett
Wellington

David Runciman writes that residents of Bethnal Green and Bow spend more than twice as much on Fixed Odds Betting Terminals as their far wealthier counterparts in Chelsea and Fulham. The government imposes a 25 per cent tax on FOBTs. This is deeply regressive taxation. Such easy money makes the government addicted to gambling – just as the Chinese government is addicted to smoking because of the revenue it derives from its tobacco monopoly.

Richard Abel
UCLA

According to a 1997 paper by E.L. Grinols and J.D. Omorov, 50 per cent of net casino revenue comes from addicted and problem gamblers, 4 per cent of the adult population. They make up about 10 per cent of casino customers. Casinos are predatory; so is the government that shares the spoils.